US Financial Crisis: South Korea – 1997 South East Asian Financial Crisis vs 2008 Financial Crisis
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Code : ECC0039
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Region : US |
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South Korean Economy South Korea, Asia's fourth-largest economy2 and 13th largest in the world3, witnessed significant economic growth over the past decades. According to the IMF, South Korea has healthy economic indicators and sufficient foreign exchange reserves. South Korea's GDP was $957.1 billion in 2007.4 Its total exports were $356.7 billion during the same year. Per capita Gross National Product (GNP) increased from just $100 in 1963 to over $20,000 in 2008. South Korea: 1997 South East Asian Financial Crisis Many economists argued that South East Asia's and especially South Korea's, economic growth and productivity had historically been the result of foreign capital investment. This overseas dependency coupled with fixed foreign exchange caused the crisis. Until 1997, Asia attracted huge capital inflow from the developed countries. The South East Asian countries, in particular, maintained high interest rates attractive to foreign investors looking for a high rate of return. As a result, the economies received a large inflow of capital. The economies of Thailand, Malaysia, Indonesia, Singapore and South Korea experienced high growth rates of 8%–12% GDP in the late 1980s and early 1990s. |
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South Korea: Mildly Impacted by US Financial Crisis 2008? The 2008 US Financial Crisis originated from the subprime mortgage20 crisis of 2007, as value of securitised mortgages decreased. The credit crunch that followed US subprime mortgage crisis and the free fall of market for complex derivatives in mid-2007, turned into a turmoil engulfing the entire US financial sector. As a result, many mortgage companies and investment firms, which invested in subprimemortgages reportedmammoth losses. Balance sheets of the financial institutions that held Mortgage-Backed Securities (MBS) were distorted. This caused liquidity crisis in the global credit markets and banking systems...
South Korea and US Financial Crisis 2008: Corrective Measures In early October 2008, South Korean President Lee Myung-bak invoked patriotism to encourage Korean banks to stop hoarding dollars and buy won. The government had also appealed people on certain things: cutting back on energy bills; buying local products; and surrendering any dollars left over from overseas jaunts, etc., that helped South Korea through the late 1990s.
